Recently, home health care provider,
Lincare Holdings Inc.
) announced that it will be acquired by The Linde Group, a German
gases and engineering company. Per the agreement, Linde agreed to
buy all the outstanding shares of Lincare in cash for $41.50 per
share or $4.6 billion. Linde plans to finance the merger through
available cash and an acquisition loan of $4.5 billion.
Offer Price Represents a 64% Premium
Rumors regarding a takeover have been doing the rounds from late
June 2012. Initially, the company's share price shot up 23.4% to
$31.17 on June 27 following the rumors and kept increasing
thereafter. The offer price of $41.50 per share represents a 64%
premium over Lincare's stock price of $25.26 on June 26, which was
the last day before rumors regarding a possible auction process
The acquisition, subject to certain regulatory conditions along
with shareholder approval, is expected to close by the third
quarter of 2012. After the acquisition, Lincare will be
incorporated into Linde as a fully-owned subsidiary.
Acquisition will Significantly Boost Linde's U.S.
The merger should be accretive for Linde as it will be able to
expand its market base significantly especially in the U.S.
Following this acquisition, Linde will be able to double sales in
its North American Gases business and target the €4 billion U.S.
health care market, which is the largest in the world.
Florida-based Lincare is a leading provider of oxygen and other
respiratory therapy services to patients at home. The company
offers services and equipment to more than 800,000 clients across
the U.S. and Canada through 1,091 local outlets. Two-thirds of the
€12 billion global health care industry is dedicated to homecare
products with an annual growth rate of roughly 6%. The merger will
enable Linde to become the global leader in health care offerings
within the gases industry.
Prior to the upcoming Lincare acquisition, Linde's connection
with the U.S. was through its Homecare business, which supplied
products to other home health care companies in the U.S. Also,
Linde's subsidiary LifeGas has been doing good business with
Lincare for several years now.
Linde's health care division provides medical gas and
pharmaceutical offerings for the treatment of a variety of clinical
conditions such as aerosol therapy, oxygen therapy, asthma,
anesthesia, chronic obstructive pulmonary disease, sleep apnea and
In 2011, Linde's health care division generated revenues of €1.2
billion. The acquisition is expected to boost this business and
produce annual revenues of €2.8 billion on a pro-forma basis.
Some of the other players in the U.S. home health care market
Gentiva Health Services Inc.
Rotech Healthcare Inc.
). Lincare Holdings currently retains a Zacks #2 Rank, which
translates into a short-term Buy rating.
GENTIVA HEALTH (GTIV): Free Stock Analysis
LINCARE HLDGS (LNCR): Free Stock Analysis
ROTECH HEALTHCR (ROHI): Free Stock Analysis
To read this article on Zacks.com click here.